Megatrends

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Unilever appears to be in acquisition mode and acquiring more targets in the US. Dollar Shave Club came first in July, with the company also widely tipped to be in the driving seat to purchase Jessica Alba’s Honesty Co, and 19 September bringing news of a further acquisition in the form of 7th Generation.

A mixed bag

Should all these deals go through to completion, then Unilever will have acquired a mixed bag of US-centric brands: a men’s grooming player; a largely baby care specialist; and a natural products-focused home care company. While there are clearly similarities between Honesty Co and 7th Generation in terms of positioning, Dollar Shave Club is an outlier. Looking at Honesty and Dollar Shave Club, there are similarities in their sales models, direct selling focuses and subscriptions, with 7th Generation an outlier as it is predominantly a ‘classic’ retail brand, sold through supermarkets etc.

Overtly green

Thinking of natural cleaning products, there is certainly a gap in the market, as, to date, none of the major manufacturers have launched an overtly ‘green offering’, probably with good reason, as potentially damaging conflict with NGOs is a danger for any company willing to stick its head above the parapet. That said, thinking longer term, the positioning of major home care companies will inevitably have to adapt as the circular economy takes a more central role in economic life; theacquisition of 7th Generation could be seen as a further step along this road. To date, 7th Generation has been a niche player in North America, with a 0.4% share of home care value sales in 2015; this is low compared to the number of consumers who report that they are concerned or interested in more sustainable products.

One could argue that the direct sales model could be a perfect way to grow this kind of brand in the US and further afield, and it fits in with Unilever’s commitment to more sustainable business practices. It is the kind of platform that could be rolled out in other regions where there is something of a disconnect between what consumers report in terms of ‘concern’ over the environment and sales of products which are positioned as more environmentally sensitive.

A sleeping giant?

With Henkel also completing on its purchase of Sun Products in September 2016, there has been a great deal of activity in the US of late, with one exception; Procter & Gamble has been suspiciously quiet. Indeed, it can be argued that the company has been somewhat slow to react to prevailing trends; Tide Spin, Dash Buttons and Gillette Shave Club have all been reactive initiatives and the company really needs to get back onto the innovation path, which had proved so successful earlier in the decade, with the launch of Tide Pods and Unstoppables.

At least part of the story is that the company has been in a focused on brand shedding and a drive to focus on its core business areas the company sits at a crossroads. Clearly it has the ability to pull off a ‘mega-deal’, but where and how would this sit with the company’s focus to date of developing a leaner, more focused company?

If we focus on geography, then Asia Pacific is a region where the company would benefit from acquisition to develop its overall market standing in key growth markets. If the focus is to catch up on ‘green’ credentials, then maybe Ecover/Method would be of interest; that said, maybe penny has dropped in terms of how distribution is working and there could be interest in moving closer to appliances which could include more interest in click and collect laundry services.